Of course, profit and cost of sales cost is the two most important components of the profit and loss statement, or at least, they will look first at what people, but the income statement is really the sum of that part Yes, they all need to be carefully, consistently and accurately considered.
In depreciation report, business can use short life method, load most of expenses over the first few years, or long-lived methods, and depreciation over the years for several enterprises The way of reporting is particularly important for them.
One of the more complex elements of the income statement is the line reporting employee pensions and post-retirement benefits. GAAP rules on this expense are complex and some and other estimates by business such as the expected return on fund portfolios secured for these future obligations will affect the amount of recorded costs Give it.
Many products are sold with explicit or implied warranty and warranty. The business must estimate the cost of these future obligations and record this amount as an expense during the same period as the item is sold. We can not really wait until the customer actually returns the product for repair or replacement.
Other operating expenses are reported, and timing when there may be income statements takes into account estimates. Some expenses are also discretionary in nature, which means that it depends on how much management discretion is being spent during the year.
Interest and pre-tax earnings (EBIT) measure the sales revenue of all less expenses on this line. This depends on all decisions made to record sales revenue and expenses, and how the accounting method is implemented.
Part of the income statement, Part 1
The first and most important part of the income statement is the line reporting sales. Companies need to be consistent every year regarding the time to record sales. For some business, the timing to record sales, the final acceptance by the customer must be performance test or satisfied For example, the advertising agency will be able to meet sales revenue for the campaign prepared for the client When would you like to report it? What if the work is completed and sent to the client for approval? When will customers approve it? When ads are shown on media? Or when the claim is completed? These are issues that the company has to decide to report on sales, must be consistent every year, the timing of the report is written in the financial statements
The next line of the income statement is cost of sales. There are three ways of reporting. One is called "first in first out" (FIFO), the other is the "last in - last out" (LIFO) method and the last is the average cost method. Cost of sales cost is a huge item in the income statement and it can be greatly impacted on the reported bottom line How is reported
Other items in the income statement include inventory write-downs. Business is also an important component of the income statement, which regularly defines losses due to theft, damage and deterioration, and bad debts to carefully inspect the inventory in order to apply cost or lower of the market (LCM) method. NPLs are bought by credit (accounts receivable) to business but owed by customers who are not going to be paid. The timing when bad loans are reported again is important. Would you like to report it before or after collection efforts are tired?
0 comments:
Post a Comment